Indian IT industry expected to grow within predicted range of 12-14% for FY16 in constant currency terms

IT industry is expected to grow within the predicted range for FY16 in constant currency terms, even after a slowdown affected some of the larger companies in the sector.Jochelle Mendonca | ET Bureau | January 29, 2016, 08:00 IST

MUMBAI: The Indian IT industry is expected to grow within the predicted range of 12-14% for FY16 in constant currency terms, even after a slowdown affected some of the larger companies in the sector.

"We think broadly it will fall within the range, though we are saying it will now meet it in constant currency terms. The Chennai floods roughly cost a week of work, though most of the hit went to the margins and not so much on the top line," Sangeeta Gupta, senior vice-president at the National Association for Software and Services Companies, told ET.

The Nasscom target, which most IT companies try to outperform, was looking hard to achieve after revenue at Tata Consultancy Services and HCL Technologies grew less than expected and the floods in Chennai threatened to hurt the industry's top line. Chennai is home to 15% of the IT sector's headcount and the floods in November-December caused almost one week of disruption.

Gupta said that in years of tremendous currency fluctuation, it makes sense to consider the target in constant currency terms.

"You can't predict the currency. Last year, we said the industry grew 13.1% in constant currency terms, but about 12% in reported currency. And given the fall in the rupee in this quarter, that will wipe out domestic growth in dollar terms," Gupta said.

India's $146-billion IT industry has been facing the brunt of whipsawing currencies this year as movements between the dollar, the euro, the Australian dollar and Latin American currencies have hurt growth.

The target for the next financial year will be unveiled on February 4 in New Delhi, ahead of the industry's flagship event 'Nasscom India Leadership Forum' in Mumbai. Gupta said digital would likely contribute 13-14% of industry revenue in FY16.

"It will be in that range (13-14%) but it's hard to give a firm number because different companies account for different things in digital.

We are trying to standardise it, but look at attrition - after so many years, that still does not have a standard definition."

Last year, Nasscom said digital contributes roughly 10% of the industry's revenue and that it was growing much faster than the traditional business. TCS said digital contributed 13.7% of its revenue in the third quarter, while Tech Mahindra said it accounts for a little over 10% of revenue.